Shoppers are NOT Strategic - Accept It and Create Value

"People need to buy from us because if they don't the local stores will go out of business. Then there won't be any local support available."
This is a mindset common with many brick and mortar retailers, especially ones where local hands on service is valuable. I often work with the bicycle industry and this is a very common attitude among retailers. If all of the local bike stores go out of business, where will we get our bikes serviced?
Although the prediction of the future may or may not be true, here is one thing that is. Customers are NOT strategic. Customers are not using the logic that says, "Gee, if I pay a little more to the local retailer now, then 5 years from now I'll still have a place to get service." Instead, customers are thinking how to get the most for their money right now.
Retailers thinking customers should be strategic is a waste of mental energy. They aren't. What should retailers do?
In the near term, retailers must accept this as inevitable. People buy where they get the most for their money. You must answer the question, "Why would someone buy from me instead of the Internet?" The answer must be something other than, "If they don't I'll go out of business and they won't have support." Some good answers include awesome service, immediate delivery, or building a sense of community.
In the long term, retailers may be able to band together to raise the attractiveness in shoppers' minds of purchasing local. Local retailers may be able to charge a price premium.
Think "Made in USA". As shoppers many of us are willing to purchase something labeled "Made in USA" because we believe it helps our country, our economy, and our neighbors. We believe the quality is good. We are proud to show others that we buy American. According to a study by Boston Consulting Group, more than 80% of Americans are willing to pay a price premium for products made in the USA.
Consumers didn't come up with this belief and logic on their own. This was a concerted effort by unions, concerned citizens and our government to make this common.
Is it possible to start a "Buy Local" movement? If all of the retailer trade associations banded together, it is likely they could. Environmentalists currently use the phrase "Think globally, act locally", retailer associations may be able to piggyback on this.
As a retailer though, you need to spend 95% or more of your energy building and running your business with the facts as they are today. The fact is, customers will buy from you when you offer more value than your competitors, including the Internet. The Internet will always have the lowest price. Accept it. Be creative. Create value.
Mark Stiving, Ph.D. – Pricing Expert, Speaker, Author
Sign up for the Pricing Perspective, a free monthly summary of my blogs and other publications.
Photo courtesy of Richard Masoner / Cyclelicious